Cheque Truncation System (CTS)

RBI is considering replacement of the existing system of settlement of payment on the basis of physical cheques by a new procedure called “ Cheque Truncation System” (CTS). It is an online image-based cheque clearing system where cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting  bank branch and transmitted electronically eliminating the actual cheque movement.  

Benefits

• Customer Service
• Extended cut off time for acceptance of Customer Cheques by banks
• Easy retrieval of information
• Reduced timelines for clearing

Operational Benefit

• MICR amount encoding not required
• Reconciliation difference eliminated - MICR and Image data travel together
• No cheques being lost/tampered/pilfered
• No risk of any manipulation of data and image during transit
• CTS 2010 standards leading to enhanced security and automation

Commercial Benefit

• Cost involved in paper movement eliminated
• Grid implementation allowing better liquidity management for banks

Fraud Prevention Mechanism Provided

• Manipulation of data and image during transit is prevented by digital signature / encryption.
• CTS 2010 standards lead to enhanced security (Pl refer to attached NPCI circular for CTS 2010 standard) MICR reject repair flag